CBG sector in 2026: From hype towards maturity

The Indian Compressed Biogas (CBG) sector is quietly but decisively entering a new phase. What began as a policy-driven sunrise industry with heavy optimism is now shaping into a more grounded, technically informed and commercially realistic ecosystem. The year 2026 is likely to mark a visible transition.

Based on developments across projects, investors, suppliers, and policymakers, here are ten trends that define where the industry is headed.

1. Technology is Maturing Beyond the Pilot Phase

Early struggles—especially with difficult substrates like paddy straw, wheat straw and other lignocellulosic feedstocks—are now being addressed through better pre-processing, improved hydrolysis approaches, smarter mixing strategies, and more realistic loading practices. Plants are learning from real operating data, not from brochures. The result is that we witness fewer failures, more stability and growing confidence in execution. Quite a lot of improvements have come out from the laboratory set up to scalable designs.

2. Machinery-Centric to Microbe-Centric Thinking

A significant mindset shift is underway. Developers and operators of CBG projects are beginning to understand that anaerobic digestion is not a mechanical system—it is a biological ecosystem. Conversations are increasingly about microbial health, retention time, inhibition, VFAs, nutrients and process stability rather than just pumps, agitators and digester sizes. This evolution alone will dramatically improve long-term plant performance. Certain projects and people will continue to get stuck in the machinery of thinking, but eventually they will learn through discovery.

3. Investors Now See CBG as an Infrastructure, Not a Startup produce.

The early narrative painted CBG as a rural entrepreneurship. That illusion has now broken. Serious investors recognise that CBG is capital-intensive infrastructure—closer to power plants than to agri-startups. This clarity is healthy: it filters unserious capital and attracts long-term, patient funding.

4. Foreign Technology Players Are Setting Up Shops in India

More global manufacturers—across upgrading systems, compressors, membranes, instrumentation and specialised equipment—are now entering India through local offices or partnerships for manufacturing. This will raise technical benchmarks and expand choices for project developers, while also putting pressure on domestic suppliers to improve quality.

5. Limited Central Budget, But Stronger State-Level Push

Central financial assistance remains constrained and is increasingly becoming a bottleneck in terms of budget allocation. However, several states are stepping up with their own policies, incentives, land support, and offtake mechanisms. The momentum is slowly shifting from “Delhi-driven” to “state-driven” implementation, which could ultimately make the sector more resilient. This trend will continue to spread.

6. The Industry Is Moving Up the Learning Curve

CBG is no longer in its awareness phase. We are now firmly in the early growth stage. Developers, bankers, EPC contractors, consultants and even government officers are beginning to understand the fundamentals. Training, operational wisdom and institutional knowledge are improving year by year.

7. Early Movers with Working Plants Will Attract Larger Capital

Those who built small plants early—often struggling through learning pains—now hold the most valuable asset in this industry: operational proof. As proof of concept becomes visible, these projects are increasingly attractive to larger funds, strategic investors and institutional capital looking for scalable platforms. They would need to up their game, so that early pain gets converted to long term reward.

8. CGD Companies Now Understand CBG’s Strategic Value

City Gas Distribution (CGD) companies were initially cautious and uncertain about CBG. That is changing. Officers on the ground now understand its role not just as a green fuel, but as a tool for supply security, price risk mitigation, and regulatory positioning. This improved institutional acceptance will ease offtake challenges going forward. Pipeline connectivity to the project site will continue to be a challenge, yet this will eventually happen.

9. By End-2026, Non-Serious Players Will Exit

Every sunrise sector goes through a hype phase—and CBG is no exception. Many entered without technical depth, financial capacity, or long-term commitment. The coming 12–18 months will likely see an exit of such players. What will remain are passionate entrepreneurs, science-backed companies, and disciplined developers. This consolidation is not decline but maturity.

10. Capex Will Remain High, But Commercial Discipline Will Improve

Capital costs are unlikely to fall dramatically in the near term. However, as the ecosystem matures, customers will start demanding performance, guarantees, and lifecycle value rather than just plant delivery. This will allow good technology providers and EPC companies to price their expertise properly. Unlike the early days—where “getting it done somehow” mattered more than margins—the future will reward quality and credibility. Strong EPC players will increasingly have the power to choose their clients. They would prioritise their own long-term credibility over quantity.

The CBG sector in 2026 will not be louder than previous years, but expected to be more serious, professional. The hype will reduce. The number of players may shrink. But the quality of projects, capital and execution will improve along with the volume of green molecules across the pipelines. That is exactly how sustainable industries are built.

(The author is Director of Hycons Bioenergy Pvt Ltd, Bengaluru, and a dedicated green energy entrepreneur, engineer & researcher. )